The lofty pine is oftenest shaken by the winds; High towers fall with a heavier crash; And the lightning strikes the highest mountain.
Blame it on the world for now. Even after a recent run of declines, we are in for a gap-down opening. The F&O expiry and a spate of results will add to the volatility. The market is also awaiting the release of Q3 GDP data later today in the US.
The meaningful correction that had eluded us for long is underway even as we absorb a flurry of earnings. The big question is whether to buy on dips or loosen up a bit more given the uncertainty on the shape of recovery. Again murmurs of a double-dip recession will get louder till a rebound happens. Some recent economic reports from the matured economies have been a little disappointing.
Even in India, the latest data on infrastructure sector growth shows it is not going to be a smooth sailing. There could be further bumps ahead. For those who have booked profits when the going was good, you have the opportunities to put your money to better use.
Results Today: Alok Industries, Ansal Infra, Apollo Hospitals, Asahi India, BOI, BGR Energy, BPCL, Britannia, Cairn India, CESC, Colgate Palmolive, corporation Bank, CRISIL, Cummins India, DLF, Emami, FT, Glenmark, Grasim, Gujarat Alkalies, Gujarat NRE Coke, Gujarat Gas, GSPC, Gulf Oil, HCL Infosystems, HDIL, Indian Overseas, Jindal Stainless, LIC Housing, M&M, Novartis, Oil India, ONGC, Opto Circuits, Patel Engineering, P&G Health, Provogue, PNB, PVR, REC, Reliance, Sobha Developers, Sterlite, Sundram Fasteners, Tata Chemicals, Tata Power, TTML, Vijaya Bank and Voltas.
US stocks tumbled on Wednesday, led by big declines in the technology space as a weaker-than-expected new home sales report added to worries about the strength of the economic recovery.
The Dow Jones Industrial Average lost 119 points, or 1.2%, to close at 9,762.69. The S&P 500 index dropped 21 points, or 2%, to end at 1,042.63. The Nasdaq Composite tumbled 56 points, or 2.7%, to close at 2,059.61.
The Dow and S&P have fallen for three of the last four sessions, and the Nasdaq for all three, as investors have turned cautious following a seven-month stock rally. Since bottoming at a 12-year low in March, the S&P 500 gained 63% through its peak on Oct. 19. But since then, it's lost 5%, as of Wednesday's close.
There's been some nervousness over the last week, and the weaker new home sales report means the US consumer is still jittery. Investors are feeling less willing to take on risk at the moment.
New home sales fell to a 402,000 unit annualized rate in September from a revised 417,000 unit annualized rate in August, the Commerce Department reported. Sales were expected to rise to a 440,000 unit annualized rate, according to a consensus estimate.
Order for durable goods that are meant to last three years or more rose 1% in September, after falling 2.6% in the previous month. The rise was in line with estimates. Goods, excluding transportation rose 0.9% after falling 0.4% in August. Economists thought they would rise 0.7%.
Another report showed that fewer metro areas reported jobless rates above 10% in September than in the previous month.
GMAC Financial Services is looking for a third bailout from the Treasury Department, according to a Wall Street Journal report. The lender is seeking between $2.8 billion and $5.6 billion, according to the Journal. The US owns a 35% stake in GMAC and has given it $13.4 billion since December 2008.
Financial and technology shares were among the hardest hit stocks.
Telecom stocks gained, including Qwest Communications, which posted a higher-than-expected quarterly profit and lifted its full-year earnings forecast. Shares gained 2.6%.
Dow stock Verizon Communications rallied 3% after releasing more details about its iPhone challenging Droid smart phone - due for release next week. The phone uses Google's Android operating system, has a mini-keyboard and can run several applications at once. It is expected to retail for $199. Fellow Dow telecom AT&T also gained, rising just short of 2%.
The dollar fell versus the euro, resuming its slide after a few up days and moving closer to a 14-month low hit last week. The greenback fell versus the yen.
US light crude oil for December delivery fell $2.09 to settle at $77.46 a barrel on the New York Mercantile Exchange.
COMEX gold for December delivery fell $4.90 to settle at $1,030.50 an ounce. Gold has surpassed records repeatedly this month due to the weak dollar and longer-term worries about inflation.
Treasury prices rose, lowering the yield on the 10-year note to 3.41% from 3.44% on Tuesday. Prices held on to gains after the government sold $41 billion in five-year notes.
Thursday's reading on gross domestic product (GDP) growth is the key economic event of the week. GDP is expected to have grown at a 3.2% annualized rate in the third quarter after shrinking at an 0.7% annualized rate in the second quarter. GDP has declined steadily for four straight quarters.
But the end of the recession doesn't necessarily mean a return to a period of robust growth, particularly amid rising joblessness and still-sluggish consumer spending. Government stimulus programs have played a big role in the recovery, and there are concerns about the strength of the system once that support is withdrawn.
The weekly jobless claims report from the Labor Department is also due in the morning.
Indian markets witnessed a sharp dent dropping the most in two months on a hawkish RBI tone in the Monetary Policy. The central bank’s move to tighten liquidity and an upward revision in inflation forecast triggered a heavy sell-off on the bourses. Weak global cues and disappointing quarterly earnings announced by select leading Indian companies further dampened the sentiment on Dalal Street.
The interest rate sensitive like the Banking and the Realty stocks were offloaded the most. Apart from the index heavyweights, even the Mid-Cap and the small-Cap stocks were hammered by the bears.
Markets saw the highest turnover ever in the F&O segment on a non-expiry day and third highest volumes in the overall market.
Technically, the NSE Nifty was seen taking support at the 4545 levels which is also the 50 Day moving average for the index. If the crucial support level is taken out, 4720-4730 levels which have acted as an important resistance in the past would be the next support.
The BSE Sensex fell 387 points at 16,353 after touching a high of 16,699 and a low of 16,311. The index opened at 16,699 against the previous close of 16,740. The NSE Nifty fell 124 points to shut shop at 4,847.
In Asia, the Nikkei in Japan was down 1.4%, while Australia's S&P/ASX ended lower by 1.6% at 4,753. Shanghai SE Composite fell 2.8% and Hang Seng index in Hong Kong fell 2%.
In Europe, stocks were in the positive terrain. The FTSE in the UK was up 0.3%, The DAX in Germany was up 0.3% and the CAC 40 index in France was up 0.2%.
Coming back to India, among the BSE sectoral indices, the Realty index was the top loser, shedding 6.2%, followed by the Metals index that was down 6% and the BSE Banking index was down 4%.
The BSE Mid-Cap index fell 3.7% and the BSE Small-Cap index was down 4.4%.
Among the 30-components of Sensex, 23 stocks ended in the red and 7 ended in the positive terrain. Hindalco, Tata Steel, Bharti Airtel, RCom, DLF and ICICI Bank were among the major losers.
On the other hand, among the major gainers were Wipro, Hindustan Unilever, Tata Motors and Grasim.
Outside the frontline indices, the big losers in the broader market were Sesa Goa, Areva Jet Airways and Sterling Biotech. On the other hand, gainers included PTC, Union Bank, Cadila and Apollo Hospital.
Tata Steel Q2 net profit fell 49% YoY to Rs9.03bn as against Rs17.9bn in the same period last year. Q2 Net sales dropped 16% YoY to Rs56.3bn as against Rs67.3bn.
Shares of Tata Steel plunged over 7% to Rs501. The stock opened at Rs534 and made an intra-day high of Rs534 and a low of Rs495. Total traded volumes stood at 3.6mn shares.
The telecom stocks continued to remain under pressure as the CBI probe on the Indian telecommunication ministry and the private operators in connection with alleged irregularities in allocation of spectrum to new operators prolong.
"It has been alleged that there had been serious irregularities in the award of Unified Access Services Licenses to private companies," CBI said.
The CBI has carried out searches to collect "incriminating documents in the Wireless Planning Cell, and in the office of deputy-director general for Access Services, Sanchar Bhawan, Ashoka Road".
Bharti Airtel lost 7%, RCom fell 6.5% and Idea declined 4.5%.
Shares of DLF further lost ground after the income-tax department gave a notice to the company asking it why its accounts for fiscal year 2007 should not be subjected to a special audit by an independent auditor.
The I-T department calls for a special audit when officials assessing a company’s tax returns suspect the tax liability has been understated.
However, according to reports, a DLF spokesman termed the new notice as a routine follow-up. “The due legal process is on, and our appeal on last year’s assessment is sub judice in the I-T department. DLF is sure of its facts and figures, which will be duly considered in the appeal.”
The stock declined over 10% in the past four trading sessions. On Tuesday, it was down 6.5% to Rs401; it opened at Rs420 and made an intra-day high of Rs425 and a low of Rs399. Total traded volumes stood at 3.9mn shares.
Shares of Power Finance zoomed from days low after the company registered a growth of 95% YoY with net profit of Rs6.37bn for the quarter ended September 30, 2009 as compared to Rs3.29bn for the quarter ended September 30, 2008.
Total Income increased from Rs16.02bn for the quarter ended September 30, 2008 to Rs20.46bn for the quarter ended September 30, 2009.
The stock ended flat at Rs227, it opened at Rs228 and made an intra-day high of Rs236 and a low of Rs216. Total traded volumes stood at 0.76mn shares.
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